Blue Sky investor brings in outside CEO

Sunday

Jul 14, 2013 at 6:00 AM

By Peter S. Cohan, WALL & MAIN

One of the biggest challenges that entrepreneurs face is to raise outside capital without losing control of their creation. A case in point is Blue Sky BioServices, a contract biopharmaceutical manufacturer on Prescott Street in Worcester, whose founder, Paul Wengender, has been replaced as chief executive officer.

Mr. Wengender has taken Blue Sky from two employees in April 2003 to about 45 by June 2013. And in the last year Blue Sky had grown at a decent clip.

"We have increased our headcount 12 percent in the last 18 months, but more than doubled our production capacity," Mr. Wengender told me.

This big gap between the growth in the number of people and the amount that Blue Sky can produce is the result of a major shift in strategy. Last July, Blue Sky did "70 percent custom work and 30 percent crank-turning. We are moving to flip those proportions to 70 percent crank-turning and 30 percent custom," he said.

On July 9, Mr. Wengender referred me to his replacement when asked about why he lost the CEO slot. Mr. Marple believes that Blue Sky's chairman, Peter Glick, who is a partner at Blue Sky's lead investor, Ampersand Capital Partners, believes that the sky's the limit for Blue Sky with Mr. Marple as CEO, Mr. Wengender as chief commercial officer, and Norm Garceau retaining his role as chief scientific officer.

As Mr. Marple explained, "Together, our team has operations, process, strategic, scientific and business development skills. I believe Paul is a critical part of Blue Sky's future, thanks to his understanding of the market and his ability to evangelize Blue Sky."

Mr. Marple has demonstrated his ability to build a small company into an attractive acquisition for a larger one. Before joining Blue Sky on July 3, he was with Xcellerex, a bioprocess company offering bioprocess equipment and regulatory compliant biomanufacturing services to pharmaceutical and biotech companies that General Electric Healthcare acquired in May 2012. His role at Xcellerex was "focusing and executing on the business strategy of the company." He previously led the finance and commercial operations at Xcellerex.

Prior to Xcellerex, Mr. Marple worked with large pharmaceutical companies.

"I have two decades of life sciences experience — with large and small companies. I worked in Indiana in corporate development for Eli Lilly; received an MBA from the University of Virginia and graduated with an Bachelor of Arts from Harvard. I do not have a technical background. My job at Xcellerex was to formulate and execute strategy and processes. I helped to negotiate partnerships for Asian expansion and upstream and downstream in the value chain," according to Mr. Marple.

His experience in forming partnerships at Xcellerex reveals insights about how Blue Sky might grow. As Mr. Marple explained, "I helped negotiate partnerships at Xcellerex — such as the one we had with GE Healthcare. In my experience, when forming life sciences partnerships, it is important to look for 'complimentarity.' For example, we wanted to go into Asia and did not have feet on the ground there. So we partnered with a company that did. We also did several technology partnerships with companies earlier in the value chain to get access to raw materials."

I gather that Mr. Glick instigated the process of recruiting Mr. Marple. According to Mr. Marple, "Peter was leading the conversation about Blue Sky's growth. I was familiar with the space; I knew the customers and what they need. I fit with Blue Sky's culture and got along great with Paul and Norm. Together we make a strong team of three."

In my interview with him in June, Mr. Wengender did not reveal that his days as CEO were numbered. In a July 10 interview, David Anderson, a partner at Ampersand, explained that Mr. Wengender and Mr. Garceau participated in the management change.

According to Mr. Anderson, "Blue Sky's team met and decided that to achieve its growth goals, it would help to add some skill sets — in managing strategy, process, and operations — so Paul and Norm would be freed up to do what they do best. One of our board members knew Ted and introduced him to the team. This was a natural evolution."

According to Mr. Marple, "Blue Sky has reached a point in its growth where both Paul and its investors felt it was necessary to bring new insight, skills and strengths on board to continue this growth and focus on execution."

If Mr. Glick is like other investors, he is using his power to boost the odds that Ampersand's partners can earn a return on the capital they've placed into Blue Sky.

Mr. Marple explained, "It's always a possibility that a company backed by a private equity or venture capital investor will sell out to a larger company in order to provide a return. But our real focus for the next few years is execution excellence. We will perform well for our customers."